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Key Factors to Impact Welltower's (WELL) Earnings This Season
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Welltower, Inc. (WELL - Free Report) is scheduled to report third-quarter 2018 results on Oct 30, before the market opens. The company’s results will likely reflect year-over-year growth in revenues, while its funds from operations (FFO) per share are expected to have witnessed a decline.
In the last reported quarter, this Toledo, OH-based healthcare real estate investment trust (REIT) delivered a positive surprise of 1.01%. Results solid higher residential fees and services revenues, as well as higher same-store net operating income (SSNOI).
Further, Welltower posted an average positive surprise of 0.24% in the trailing four quarters, surpassing estimates twice for as many misses. The graph below depicts this surprise history:
Let’s see how things have shaped up for this announcement.
Factors at Play
Healthcare REITs are well poised to benefit from increasing healthcare spending and the demographic boom that is being fueled by the aging baby boomers. Amid these, Welltower is anticipated to have gained from its portfolio of healthcare facilities concentrated in major, high-growth markets of the United States.
Further, continued efforts to optimize its portfolio through strategic investments and non-core dispositions will likely have benefited the company in the Sep-end quarter. Also, this July, the company closed the acquisition of Quality Care Properties jointly with ProMedica Health System, for $4.4 billion. This is expected to have buoyed the company’s operating and financial performance in the quarter.
Amid these, the Zacks Consensus Estimate for revenues is pinned at $1.16 billion, indicating growth of 6.4% year over year.
Nonetheless, increase in supply of senior housing assets in some markets may burden the performance of Welltower’s senior housing assets. Since this curtails landlords’ pricing power and limits growth in occupancy level, we expect the prevalent oversupply situation to have impacted the company’s third-quarter numbers.
Furthermore, rising interest rates is another unfavorable development for the company. Since healthcare REITs have substantial exposure to long-term leased assets that are subject to annual escalations, this REIT sector is the most sensitive to interest rate hikes.
Also, amid lack of any positive catalyst, the Zacks Consensus Estimate for third-quarter 2018 FFO per share remained unchanged at $1.02, over the past month. This also indicates a 5.56% decline as compared to the year-ago tally.
Earnings Whispers
Here is what our quantitative model predicts:
Welltower has the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Welltower’s Earnings ESP is +1.06%.
Zacks Rank: The company currently carries a Zacks Rank of 3.
A positive Earnings ESP is a meaningful and leading indicator of a likely beat in terms of FFO per share. This, when combined with a favorable Zacks rank, makes us reasonably confident of a positive surprise.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
American Tower Corporation (AMT - Free Report) , slated to report Sep-end quarter results on Oct 30, has an Earnings ESP of +2.29% and a Zacks Rank of 3.
Public Storage (PSA - Free Report) , set to release quarterly figures on Oct 30, has an Earnings ESP of +0.27% and a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Image: Bigstock
Key Factors to Impact Welltower's (WELL) Earnings This Season
Welltower, Inc. (WELL - Free Report) is scheduled to report third-quarter 2018 results on Oct 30, before the market opens. The company’s results will likely reflect year-over-year growth in revenues, while its funds from operations (FFO) per share are expected to have witnessed a decline.
In the last reported quarter, this Toledo, OH-based healthcare real estate investment trust (REIT) delivered a positive surprise of 1.01%. Results solid higher residential fees and services revenues, as well as higher same-store net operating income (SSNOI).
Further, Welltower posted an average positive surprise of 0.24% in the trailing four quarters, surpassing estimates twice for as many misses. The graph below depicts this surprise history:
Welltower Inc. Price and EPS Surprise
Welltower Inc. Price and EPS Surprise | Welltower Inc. Quote
Let’s see how things have shaped up for this announcement.
Factors at Play
Healthcare REITs are well poised to benefit from increasing healthcare spending and the demographic boom that is being fueled by the aging baby boomers. Amid these, Welltower is anticipated to have gained from its portfolio of healthcare facilities concentrated in major, high-growth markets of the United States.
Further, continued efforts to optimize its portfolio through strategic investments and non-core dispositions will likely have benefited the company in the Sep-end quarter. Also, this July, the company closed the acquisition of Quality Care Properties jointly with ProMedica Health System, for $4.4 billion. This is expected to have buoyed the company’s operating and financial performance in the quarter.
Amid these, the Zacks Consensus Estimate for revenues is pinned at $1.16 billion, indicating growth of 6.4% year over year.
Nonetheless, increase in supply of senior housing assets in some markets may burden the performance of Welltower’s senior housing assets. Since this curtails landlords’ pricing power and limits growth in occupancy level, we expect the prevalent oversupply situation to have impacted the company’s third-quarter numbers.
Furthermore, rising interest rates is another unfavorable development for the company. Since healthcare REITs have substantial exposure to long-term leased assets that are subject to annual escalations, this REIT sector is the most sensitive to interest rate hikes.
Also, amid lack of any positive catalyst, the Zacks Consensus Estimate for third-quarter 2018 FFO per share remained unchanged at $1.02, over the past month. This also indicates a 5.56% decline as compared to the year-ago tally.
Earnings Whispers
Here is what our quantitative model predicts:
Welltower has the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Welltower’s Earnings ESP is +1.06%.
Zacks Rank: The company currently carries a Zacks Rank of 3.
A positive Earnings ESP is a meaningful and leading indicator of a likely beat in terms of FFO per share. This, when combined with a favorable Zacks rank, makes us reasonably confident of a positive surprise.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
Iron Mountain Incorporated (IRM - Free Report) , scheduled to release earnings on Oct 25, has an Earnings ESP of +0.62% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Tower Corporation (AMT - Free Report) , slated to report Sep-end quarter results on Oct 30, has an Earnings ESP of +2.29% and a Zacks Rank of 3.
Public Storage (PSA - Free Report) , set to release quarterly figures on Oct 30, has an Earnings ESP of +0.27% and a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>